A variety of affluent businessmen — former Denver Broncos linebacker Bill Romanowski among them — funded luxury vacation-club memberships with tax breaks they got under a Colorado law intended to compensate land preservationists.

Though the transactions are legal, the Colorado Division of Real Estate is reviewing property appraisals that fueled the deals as part of a broadening inquiry into conservation easements, where landowners are compensated for preserving open space.

Unnaturally high appraisals would mean the businessmen benefited from state tax laws unfairly. Appraisals help determine the size of the tax break landowners get.

Individuals involved in the project insist the deals will withstand any scrutiny.

The group of 19 businessmen — many of them among the state’s lesser-known entrepreneurs — last year capitalized on Colorado’s generous conservation laws by first buying ranch land owned by a hunting club, protecting it from developers, then using the resulting tax benefits to offset vacation-club membership fees that were added to the purchases, according to land records and interviews.

Along with conserving the property and paying for their vacation memberships, the investors also ensured that the hunting club that had owned the land — and for years counted Romanowski and others in the group among its clients — would continue operating there under a private lease.

“We’re no different”

“Much like a rancher might use his tax benefits to fund the purchase of additional cattle, this group used their tax benefits for a creative investment purpose that was a little bit different,” said Rodney Atherton, a Denver tax attorney who helped engineer the deal. “That we’d use tax dollars to go on vacation is not sleazy or abusive. We’re no different than anyone else, and what we choose to do with those benefits is up to our creativity.”

Atherton refused to identify the vacation club they joined or the tax-break amounts.

Romanowski’s business, Romanowski Thoroughbreds LLC, was one of 29 businesses and individuals subpoenaed in the investigation of at least two easements controlled by Noah Land Conservation, which oversees the land that was part of the vacation club deal and is now known as Colorado Natural Land Trust.

Romanowski did not return telephone messages left with the nutritional-supplements business he runs in Lafayette, Calif.

Big-name investors

Along with Romanowski, the investors in the vacation club deal include Ellis Rowe, owner of Rowe Colorado Holdings LLC and a division president of candy bar giant Mars Inc.; Nicolae Toderica, the president of Star Precision, a sheet-metal manufacturer in Longmont; and Brandt Rudzinski, the owner of High Times LLC and an owner of Blazer Structures, an Aurora waterproofing company that helped build Denver’s stadiums and airport.

The businessmen could not be reached for comment.

The conserved land is 2,067 acres of prime pheasant- and deer-hunting ground near Byers in rural Adams County, land records show.

The property makes up The Bluffs, a hunting enterprise run by Russell MacLennan, the third generation of a Colorado ranching family that has owned the land since the 1980s.

The businessmen’s land purchase included an additional sum — at least one said he paid an extra $20,000 — to join the vacation club, which allows members to visit exclusive resorts around the world, Atherton and MacLennan said.

The businessmen recouped much of their investments by cashing in the tax breaks they got — some up to $260,000 — for placing the property into conservation easements that forever protect it from development, Atherton and MacLennan said.

As part of the deal, the businessmen are members of The Bluffs and, in turn, leased all the protected land back to the hunting club so it could continue to use it, MacLennan said.

Colorado law allows landowners to sell the tax credits they get from conserved property — often at about 80 cents on the dollar — and the buyers can then apply those credits to their state income-tax liability.

Easements must be placed in a nonprofit land trust that is charged with ensuring protected land remains that way. In this case, the businessmen gave the land to Arvada-based Noah.

Easement tax credits are approved by the land trust, much like a nonprofit agency provides a receipt for a donation.

MacLennan said he got thousands of dollars from selling off the family-owned ranch in parcels as large as 244 acres, but it’s not as if he became a millionaire.

The proceeds went to relieve debts that had choked his family for years, MacLennan said.

“Most large landowners, especially if you’re one of the old ranch families, are in same boat: land rich and cash poor,” said MacLennan, 31. “It’s a sour chord to sell it to developers.”

For his part, MacLennan retained a 96.8-acre piece but still had to pay for his vacation-club membership.

Focus is on open space

The vacation club investment angle doesn’t skirt the intent of the state’s conservation laws, which experts say are focused on maintaining open space for future generations, not on how landowners spend the tax breaks.

“It’s actually a very clever way to bring people into the investment,” said Will Shafroth, executive director of the Colorado Conservation Trust and who was part of the team that helped draft the state’s easement laws in 1990. “A rancher can take his money and take a cruise if he wants to. The smell test is the appraisals.”

If state investigators find the appraisals are inflated, the businessmen could be required to pay back taxes and interest, officials said. Abnormally high appraisals could benefit landowners unfairly and short the government of tax revenue.

“I don’t think anybody is embarrassed by the appraisals, although they are very subjective documents,” Atherton said of the deals. “We thought they came up with theories that we really liked and were in compliance with the statute.”

Easement values, the appraisals they are based on and the tax benefits they derive are not public information.

Easements controlled by the Noah land trust were of interest to state officials when they noticed that the tax credits seemed unusually large compared with what the investors paid for the land.

“It’s difficult to believe a property can be worth so little on day one and so much more a short time later, creating an easement windfall,” said Erin Toll, real estate division director. “We are very interested in evaluating the credibility of the appraisals.”

Conservation values may be substantial if a property is unusual or is habitat for endangered species of plants or creatures.

MacLennan said The Bluffs is home to the mountain plover, a little bird nearly listed among the endangered species, and several unique plants and fauna.

The property sits on the confluence of the East and West Bijou creeks, a conglomeration of cottonwoods, native grasslands and bluffs that are ideal habitat for upland birds such as pheasant and chukar, and prime cover for mule deer. In short, it’s a sportsman’s paradise.

“Some of us like to pheasant hunt, and they have great ground,” Atherton said. “We thought it should be protected. I’ve hunted on this for years.”

More and more destination clubs are looking toward conservationism as a way to make huge swatches of land available to their clientele. One group, CIEL Club, recently announced it would take on projects that placed land into easements — including an unidentified Colorado ranch — giving tax benefits to its members.

“The bottom line is we have a really nice piece of land conserved and all these people are going to be investigated,” Atherton said. “It’s unfortunate.”

David is a member of the Investigations Team and has been at The Denver Post since 1999. He was a founding member of the team before moving on to cover banking, finance, human services, consumer affairs, and business investigations. He has also worked at newspapers in New York, St. Louis and Detroit over a 35-year career.

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